The government have long recognised the special circumstances of those in the armed forces. A relatively mobile workforce needs the flexibility to lease their home for varied periods of time when overseas. Also, members of the armed forces have specific needs and, due to the nature of their nomadic lifestyle, changes of address and BFPO addresses are quite normal in their credit history; something that can count against one’s credit history.
The UK Government run a Help to Buy scheme specifically to help members of the armed forces to buy their own property. Under the Long Service Advance of Pay (LSAP) scheme, you could get an interest-free advance of pay of up to £8,500 to put towards a house purchase. In Spring 2014, this was replaced by Forces Help to Buy (FHTB), which allows you to borrow up to 50% of your annual salary, to a maximum of £25,000.
To qualify for Forces Help to Buy mortgage, you must have completed the pre-requisite length of service, have more than 6 months left to serve at the time they apply and meet the right medical categories.
In addition to the FHTB, the Government offer Help to Buy to all qualifying members of the general populous. This system works by offering qualifying applicants 20% of the purchase price (as an equity loan) which they add to an existing 5% deposit to make up a 25% deposit based on value of the home being purchased. This leaves applicants able to raise the remaining 75% of the purchase price from a mortgage lender.
This scheme requires that applicants do not own other property at the time of application. Outside London the maximum property value is £600,000 and qualifying properties must be new build. When you sell your property, or at the expiry of the maximum 25 year term, you simply repay the equity loan plus a pro rata share of any increase in the value of the property during ownership. No interest is payable on the equity loan element for the first 5 years. After that a charge of 1.75% is made per annum, which increases by RPI + 1% thereafter. An administrative charge of £1 per month is payable.
At Mortgage Required we are authorised Help to Buy agents and also offer a specialist service to members of the armed services. For more information contact us on 01628 507477.
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